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BajajCapital Insurance Broking Ltd.
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LIFE INSURANCE
Elevate Your Financial Journey With High Protection ULIPS
INFLATION INFLUENCING TODAY’S INVESTMENT MARKET:
Over the past decade, inflation has been on the rise, significantly impacting traditional investment returns, which typically hove around 5% to 6% per annum.
THE PERFECT SOLUTION:
These numbers highlight the importance of considering real returns and tax implications when making investment decisions, emphasizing the potential benefits of equity with protection & investments which provides high returns in combating inflation.
DO YOU LOOK AT VARIOUS INVESTMENT & INSURANCE PLANS TO CATER DIFFERENT NEEDS LIKE
SOLUTION TO THIS IS HPUL (HIGH PROTECTION UNIT LINKED INSURANCE PLAN)
Market Linked Insurance Plans that unlike other pure insurance policies give you both insurance protection and compounded investment returns under a single integrated plan. They cover all your needs such life cover, market returns , accident/ disability cover, liquidity, flexibility, etc.
HPUL = Wealth Creation + Protection + Liquidity
KEY FEATURES OF HIGH PROTECTION ULIPs
BEST HIGH PROTECTION ULIPs
BOUNDARY CONDITIONS
ATPD* = Accidental Total Permanent Disability Rider
IBAD** = Income Benefit Disability Rider
ADB*** = Accidental Death Cover
HOW DOES HPUL PLAN WORK?
Example 1: Mr. Aakash is a 35 years old salaried empolyee in X company. He recently got married and wants to buy Param Rakshak Pro till 85 years of age. He opted for a 12 years of premium paying term (PPT) with sum assured of 1 crore.
FUND PERFORMANCE - TATA AIA PARAM RASHAK PRO
Example 2: Mr. Ramesh is a 35 years old government employee. With a policy term and premium paying term of 40 years, he wants to buy Bajaj Allianz Invest Protect Goal Policy for Sum Assured of Rs. 1 crore.
FUND PERFORMANCE - BALIC INVEST PROTECT GOAL
Example 3: Ram, 30 years old, buys Level cover with Capital Guarantee of HDFC Smart Protect Plan, with a PPT of 10 years and PT of 40 years, he chooses a Sum assured of Rs. 1 crore, by paying a premium of Rs. 1 lakh annually.
FUND PERFORMANCE - HDFC SMART PROTECT PLAN
Example 4: Ankit is 35 years old and buys Protect N Gain Policy of ICICI Pru. He chooses a policy till age 75 with premium paying term of 10 years.
FUND PERFORMANCE - ICICI PRU PROTECT N GAIN
“High Protection ULIPs offer life insurance coverage and high investment returns, ensuring both security and growth.”
FIXED INCOME
BONDS
Types and Returns
Government Bonds (G-Secs): These are securities issued by the government, offering high yields and exceptional liquidity due to their active trading in secondary markets. As they are backed by the government, they are considered virtually risk free.
Corporate Bonds: Issued by corporations, these bonds can provide higher returns, particularly in a high-interest-rate environment. Bonds rated AA or AA+ are relatively safe, offering the potential for capital gains when interest rates fall.
RBI Floating Rate Bonds: These bonds offer attractive yields (e.g., 8.05%) but come with a seven-year lock-in period, limiting liquidity. The interest rate is periodically adjusted, providing some protection against inflation.
Liquidity
Government Bonds (G-Secs): Highly liquid due to their active trading in secondary markets.
Corporate Bonds: Liquidity varies; higher-rated bonds tend to be more tradable.
RBI Floating Rate Bonds: Limited liquidity due to lock-in periods and lack of tradability.
Risk
Government Bonds (G-Secs): Zero default risk owing to the sovereign guarantee.
Corporate Bonds: Higher risk compared to G-Secs but with the potential for higher returns. The creditworthiness of the issuing corporation is a critical factor.
RBI Floating Rate Bonds: Low default risk but limited by liquidity constraints due to lock-in periods.
Returns
Government Bonds (G-Secs): Offer stable returns backed by the government.
Corporate Bonds: Potential for higher returns and capital gains, especially when interest rates decrease.
RBI Floating Rate Bonds: Attractive fixed yields, but limited by significant lock-in periods.
FIXED DEPOSITS (FDs)
Types and Returns
Bank Fixed Deposits: Offer fixed interest rates for predetermined periods. The returns are guaranteed but typically lower than those of bonds.
Corporate Fixed Deposits: These may offer higher interest rates but come with higher risks, as they are unsecured.
Liquidity
Bank Fixed Deposits: Generally, penalties are applied for premature withdrawal, making them less flexible.
Corporate Fixed Deposits: Similar liquidity issues with potential penalties for early withdrawals.
Risk
Bank Fixed Deposits: Low risk due to insurance coverage up to a certain limit (e.g., ?5 lakh in India), although they can be affected by the bank’s stability.
Corporate Fixed Deposits: Higher risk due to lack of insurance and potential company-specific issues.
Returns
Bank Fixed Deposits: Guaranteed but lower returns.
Corporate Fixed Deposits: Higher returns but with associated risks.
POST OFFICE SCHEMES
Types and Returns
Kisan Vikas Patra (KVP), National Saving Certificate (NSC), Post Office Saving Account: These are popular small savings schemes offering fixed returns.
Returns
Generally lower compared to bonds but considered reliable and risk-free.
Liquidity
Post Office Schemes Typically have penalties for premature withdrawals, making them less liquid.
Ease of Access
Can be cumbersome to start and manage compared to modern financial instruments.
Risk
Risk-Free Backed by the government, these schemes are considered very safe.
Customer Experience
Often reported as less satisfactory compared to contemporary FinTech platforms.
Returns
Fixed Returns: Lower but guaranteed returns.
SUMMARY OF COMPARISON
Liquidity
Best: Government Bonds (G-Secs) and certain Corporate Bonds (highly rated and actively traded).
Moderate: Bank Fixed Deposits (with penalties) and Corporate Fixed Deposits.
Least: RBI Floating Rate Bonds and Post Office Schemes (due to lock-ins and penalties).
Risk
Lowest: Government Bonds (G-Secs) and Post Office Schemes (government-backed).
Moderate: Bank Fixed Deposits (insured up to a limit) and highly rated Corporate Bonds.
Highest: Corporate Fixed Deposits and P2P Lending (unsecured and prone to defaults).
Returns
Potentially Highest: Corporate Bonds (especially in high interest environments).
Moderate: Government Bonds (G-Secs) and RBI Floating Rate Bonds (good yields but with lock-in).
Guaranteed but Lower: Bank Fixed Deposits and Post Office Schemes.
CONCLUSION
When deciding among bonds, fixed deposits (FDs), and post office schemes, investors should consider their risk tolerance, liquidity needs, and desired returns. Here are some guidelines:
Stability and Guaranteed Returns: Bank Fixed Deposits or Post Office Schemes are suitable for those seeking low risk and assured returns.
Higher Returns with Acceptable Risk: Corporate Bonds can be a good option for those willing to take on more risk for potentially higher returns.
Long-Term Investment Horizon: Bonds, particularly Government Bonds (G-Secs) and highly rated Corporate Bonds, are ideal for long-term investors due to their higher return potential and liquidity.
In summary, the choice between bonds, FDs, and post office schemes depends on individual investment goals, risk appetite, and liquidity needs. Each instrument has its unique features and benefits, making them suitable for different types of investors.
MUTUAL FUNDS
Diversification is a key element of a good investment portfolio. Investors try to spread their funds across various asset classes like equity, debt, real estate, gold, etc. Even within each asset class, they try to further diversify to minimize risks. In equity investing, a known method of reducing risks is diversifying your equity portfolio by investing in shares of companies from different sectors and of market capitalizations. This is where the Index Funds step in.
WHAT ARE INDEX FUNDS?
As the name suggests, an Index Mutual Fund invests in stocks that imitate a stock market index like the NSE Nifty, BSE Sensex, etc. These are passively managed funds which means that the fund manager invests in the same securities as present in the underlying index in the same proportion and doesn’t change the portfolio composition. These funds endeavor to offer returns comparable to the index that they track.
HOW DO INDEX FUND WORK?
Let’s say that an Index Fund is tracking the NSE Nifty Index. This fund will, therefore, have 50 stocks in its portfolio in similar proportions. An index can include equity and equity-related instruments along with bonds. The index fund ensures that it invests in all the securities that the index tracks.
While an actively managed mutual fund endeavors to outperform its underlying benchmark, an index fund, being passively managed, tries to match the returns offered by the underlying index.
WHO SHOULD INVEST IN AN INDEX FUND?
Since Index Funds track a market index, the returns are approximately similar to those offered by the index. Hence, investors who prefer predictable returns and want to invest in the equity markets without taking a lot of risks prefer these funds. In an actively managed fund, the fund manager changes the composition of the portfolio based on his assessment of the possible performance of the underlying securities. This adds an element of risk to the portfolio. Since index funds are passively managed, such risks do not arise. However, the returns will not be far greater than those offered by the index. For investors seeking higher returns, actively managed equity funds are a better option.
FACTORS TO CONSIDER BEFORE INVESTING IN INDEX FUNDS
Here are some important aspects that one must consider before investing in index funds in India:
1. Risk and Return
Since index funds track a market index and are passively managed, they are less volatile than the actively managed equity funds. Hence, the risks are lower. During a market rally, index funds returns are good usually. However, it is usually recommended to switch one’s investments to actively managed equity funds during a market slump. Ideally, one should have a healthy mix of index funds and actively managed funds in their equity portfolio. Further, since the index funds endeavor to replicate the performance of the index, returns are similar to those of the index. However, one component that needs attention is “Tracking Error”. Therefore, before investing in an index fund, one must look for the scheme with the lowest tracking error.
2. Invest according to your Investment Plan
Index funds are recommended to investors with an investment horizon of 7 years or more. It has been observed that these funds experience fluctuations in the short-term but it averages out over a longer term. With an investment window of at least seven years, one can expect to earn returns in the range of 10-12%. One can align their long-term investment goals with these investments and stay invested for as long as they can.
3. Tax
Being Equity Funds, the tax treatment applicable for equity schemes will be applicable for Index Funds.
GENERAL INSURANCE
It Feels like magic
“Pioneering a new era in health insurance, the innovative Elevate Policy enables you to customize your coverage and enjoy limitless benefits like never before”
This comprehensive health insurance plan is crafted to meet the unique health needs of each client, offering infinite sum insured, infinite claim amount, infinite cumulative bonus, infinite assurance, and infinite reset. Additionally, discover the power of personalization with a variety of add-ons.
Highlights of the Plan
Infinite Care - Coverage up to Unlimited Sum Insured for any one claim in the lifetime of the policy.
Cover will have to be opted in first 2 Policy years since date of joining. Coverage will cease once a claim is made under this cover and will not be available for
Power Booster (Guaranteed Super Bonus) - 100% additional SI per year up to unlimited SI; irrespective of claims.
Infinite Sum Insured - Unlimited Based Sum Insured Available
Jumpstart - Covers Asthma, Diabetes, Hypertension, Hyperlipidaemia, Obesity & PTCA from 31st day.
Claim Protector - Non-Payable items like Gloves, Cotton, Syringes and masks are covered upto Sum Insured.
RESET - Restoration benefit upto 100% Sum Insured - Same Person Same illness
Room Modifier - Insured can Upgrade or downgrade their Room Category as per their choice.
Maternity Benefit - Limit available upto 1 Lac.
Features of the Plan
How much does it Cost - Few Examples ..
Note: All premiums shown are including GST
Disclaimer: Bajaj Capital Limited (‘BCL’) has taken due care and caution in presenting factually correct data contained herein above. While BCL has made every effort to ensure that the information/data being provided is accurate. BCL does not guarantee the accuracy, adequacy or completeness of any data/information in the publication and the same is meant for the use of the recipient and not for circulation. Readers are advised to satisfy themselves about the merits and details of each investment scheme, before taking any investment decision. BCL shall not be held liable for any consequences, legal or otherwise, arising out of use of any such information/ data and further states that it has no financial liability whatsoever to the recipient/ readers of this publication. Neither BCL nor any of its directors/ employees/ representatives accept any liability for any direct or consequential loss arising from the use of data/ information contained in the publication or any information/ data generated from the publication. Nothing contained in this publication shall constitute or be deemed to constitute a recommendation or an invitation or solicitation for any product or services. Any dispute arising in future shall be, subject to the Court(S) at Delhi. Views given in the articles are the personal views of the contributors and not that of the company. Readers are advised to go through the respective product brochure/ offer documents before making any investment decisions. Disclaimer: The rates of interest are applicable as on the data mentioned herein above. The rate may be revised at the sole discretion of the respective companies inviting the Fixed Deposits without further notice. Printed by, Rajiv Wadehra, Published By, Raji Wadehra on behalf of Bajaj Capital Investment Centre Limited, Bajaj House, 97 Nehru Place, New Delhi - 110019, and Printed at Sundeep press C-105/2, Naraina, Industrial Area Phase - New Delhi - 110028, and Published at Bajaj House,97 Nehru Place, New Delhi - 110019, Editor-Rajiv Wadehra (CIN: U0000DL1988PLC039417))
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